Too many looked the other way when it came to money laundering in B.C. – Commentary by Dermod Travis, IntegrityBC

Could a similar question be posed of money laundering at B.C. casinos to that of the philosophical thought experiment, “if a tree falls in a forest and no one is around to hear it, does it make a sound?”

The question might go like this: if money laundering happens and everyone looks the other way, was it really laundered?

Citing a till-then secret 2016 report by auditor MNP LLP, the Vancouver Sun’s Sam Cooper reported last fall that B.C.’s gaming policy and enforcement branch (GPEB) had “compiled a document which identified approximately $13.5 million in $20 bills being accepted at River Rock Casino in July 2015.”

The MNP report noted that: “Law enforcement intelligence has indicated (the funds) may be the direct proceeds of crime,” adding “casino staff are accepting these wads of cash even though there is “no known source of funds.”

Yet, in an August 2015 interview with Business in Vancouver – one month after that $13.5 million walked in – the then-vice president of corporate security and compliance at Great Canadian Gaming, Robert Kroeker, insisted that: “money laundering doesn’t happen at Great Canadian Gaming facilities. Regulations make it impossible to launder money through B.C. casinos.”

River Rock is a Great Canadian facility.

It’s possible that one of the causes for much of the muck the B.C. Lottery corporation (BCLC) is now trying to wipe off itself can be traced back to 2001, when then-solicitor general Rich Coleman announced the restructuring of gaming in B.C.

The mandates of five agencies that had been responsible for oversight of the industry – the Gaming Policy Secretariat, the Gaming Commission, the Racing Commission, the Gaming Audit and Investigation Office, and the BCLC – were merged into two: GPEB and the BCLC.

It wasn’t long before the red flags started popping up.

By 2005, B.C.’s then-auditor general Wayne Strelioff called on the BCLC to “improve the reporting it provides to its Board of Directors and “strengthen surveillance in casinos.” GPEB was advised to “improve its casino-related processes, including audit and compliance and public reporting.”

Over the next four years the BCLC was warned that casinos were failing “to identify suspicious transactions, didn’t collect enough information on potential criminals, and many of the reports that were filed were late.”

In 2011, CTV reported that the BCLC had been fined $670,000 by the Financial Transactions and Reports Analysis Centre (FINTRAC), in 2010, following an audit “that revealed hundreds of errors made reporting cash transactions over $10,000.”

FINTRAC is the federal body mandated “to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities.”

Michael Graydon, then-BCLC president, told CTV it was now “in complete compliance with FINTRAC rules, and that most of its problems were related to late filing of reports because of technical glitches and human error.”

Three years later, the BCLC’s executive finally approved “a plan to buy a high-tech software system to flag suspected money-laundering transactions, at a budgeted cost of $7.4 million.”

They’re still working out the bugs, as Cooper recently reported.

In the spring of 2014, nearly $27 million “flowed through two B.C. casinos” – most in bundles of $20 bills – according to CBC News.

The bulk of it, $24 million, at River Rock, one of Kroeker’s facilities where “money laundering doesn’t happen.”

An internal 2016 GPEB audit obtained by Cooper alleges “that, in 2015, three B.C. casinos allowed gamblers to purchase chips with $6.7 million from illegitimate lenders. River Rock accepted $5.37 million of that total – or 79 per cent.”

Less than four months after MNP delivered its report to former finance minister Mike de Jong, Great Canadian Gaming was one of the $10,000 sponsors of the B.C. Liberal party’s 2016 convention.

This past summer, B.C.’s deputy attorney-general, Richard Fyfe, “gave thumbs up for almost 200 court administrators and sheriffs from across B.C. to hold a $91,650 leadership conference at River Rock,” as Bob Mackin reported in January.

GPEB found one way to try and make money laundering disappear – or at least draw less attention to it – it stopped using the term in its annual table of incidents in 2013.

Money laundering became “suspicious transaction reports” and then, in 2015, was grouped in with “criminal code related offences.”

Something else disappeared, part of Kroeker’s work history.

He’s no longer with Great Canadian Gaming, but you wouldn’t know he had ever been there from the biography posted to his new employer’s website. That career highlight was there, but it was removed by them sometime after April 2016.

He’s still a vice-president of compliance and security, only now with the B.C. Lottery corporation.